Power Transition in Turkmenistan Could Mean Big Changes for Neighbors

The forthcoming political change will have an effect on huge power sources, particularly pure gasoline, in Turkmenistan, some of the remoted and impoverished international locations in Eurasia. The ruling Democratic Celebration of Turkmenistan, led by long-time President Gurbanguly Berdymukhamedov, not too long ago nominated his son, Vice Chairman Serdar Berdymukhamedov, as its subsequent presidential candidate. This transfer got here simply days after President Berdymukhamedov hinted at stepping down. Whether or not Serdar Berdymukhamedov will deliver change to this energy-rich hermit kingdom is completely unknown, however the potential for the Turkmen individuals – and power shoppers in Europe – is critical.   

At a latest celebration discussion board, the chief’s son declared: “I firmly imagine in our individuals, of their lofty and unshakable spirit, that, by becoming a member of forces, we are going to work to additional remodel our Motherland, strengthening the religion of President Arkadag (“Protector”—A.C.) in a brilliant and completely happy future,” declared the candidate for the put up of head of state.

Authoritarian Turkmenistan, which upholds a near-total media censorship, a de facto ban on a lot web content material and unprecedented neutrality (akin to a combination between Switzerland and North Korea), has been roiled not too long ago by meals shortages, financial disaster, and the impacts of Covid-19. Spiritual and political expression is strictly managed, with no impartial human rights monitoring organizations.

President Berdymukhamedov was elected in 2007 after receiving practically 90 p.c of the vote. After he took workplace, Turkmens hoped to loosen up the tight management exercised by his predecessor, President Saparmurat Niyazov, referred to as ‘Turkmenbashy,’ the top of Turkmen. Nonetheless, his tenure confirmed little signal of real political and financial reforms. As a substitute, following within the steps of Niyazov, Berdymukhamedov established his personal cult of persona.  Economically he promoted bold improvement tasks to increase airports, seaports, railroads, and pure gasoline pipelines, certainly one of which was meant to deliver Turkmen gasoline to Europe through Kazakhstan and Russia. When an explosion destroyed that pipeline in 2008 (and Turkmen management confirmed an curiosity in diversifying its exports in the direction of China), its relationship with Russia’s Gazprom went with it. Ashgabat traded its one actual exterior accomplice – Moscow – for a brand new one: Beijing.

However with Berdymukhamedov having introduced an early presidential election set for March twelfth, there’s hope that the switch of management might result in a gap up and partial reform.

Turkmenistan has a geostrategic location amidst the Center East, Europe, and Asia. The nation’s gasoline reserves are estimated to be the world’s fourth-largest, representing about 10% of worldwide provides and the lion’s share of the Turkmen financial system. State-owned TurkmenGaz is the first Turkmen operator and the biggest gasoline firm in Central Asia.

Beijing is palms down the biggest purchaser of Turkmen pure gasoline; imports hit 34 billion cubic meters (bcm) in 2021, adopted by Russia with 10 bcm. President Xi Jinping of China has pledged US$500 million in help to Central Asian international locations, together with Turkmenistan, to make sure the sleek operation of oil and gasoline pipelines, speed up the development of Line D of the China-Central Asia Fuel Pipeline, promote the power sector’s low-carbon transition, and increase cooperation throughout the economic power chain. It additionally ensured future gasoline deliveries in trade for drilling further wells in Turkmenistan by China’s state-owned CNPC, as Turkmenistan lacks the infrastructure to export extra of its sources. Over the previous decade, Ashgabat has grown depending on Beijing and its power tasks within the nation.

Though China took Russia’s title as the biggest gasoline buyer in 2010, Russia is creeping again onto the scene. In 2019, Russia’s state-owned power large Gazprom restarted Turkmen gasoline purchases, signing a five-year contract for yearly provides of 5.5 billion cubic meters. Russia expects to double its import by 10 billion cubic meters of pure gasoline from Turkmenistan this yr. Shopping for low cost gasoline from neighbors – notably in energy-rich ex-Soviet international locations – and reselling that gasoline for increased costs in Europe is a basic arbitrage tactic of Moscow. Russia’s renewed curiosity in Turkmen gasoline could have huge implications for Europe’s power.

However due to Turkmenistan’s long-term contracts with China and Russia, gasoline from its presently producing wells is generally spoken for within the near- to medium time period.

Moreover, Turkmenistan doesn’t have the mandatory transportation infrastructure to maneuver gasoline to Europe by itself. It may transfer gasoline to Europe by way of Russia, by way of Iran through Turkey, or throughout a yet-to-be-built undersea Trans-Caspian pipeline, to which Ashgabat has but to commit. Such a pipeline would join the Turkmen fields with Azerbaijan and the entry level to the Southern Fuel Hall.

All three routes face obstacles, together with have to renovate current pipelines or construct new ones, add extra capability, after which, most vital, drill new gasoline wells to fulfill European demand. Whether or not financing for any of this could be obtainable from prospects centered on funding in renewables is an open query.

Ashgabat insists on promoting its gasoline on the Turkmen border, which leaves downstream pipeline improvement to others. Former U.S. Ambassador to Turkmenistan Allan Mustard notes, “Turkmenistan has a commodity, pure gasoline, all of a sudden in a lot increased demand in Europe because of geopolitics. The query is whether or not Turkmenistan is ready to collaborate with western companies and governments to ship it.”

Moreover, Turkmenistan plans to ship gasoline to India and Pakistan through Afghanistan. The Turkmenistan-Afghanistan-India-Pakistan (TAPI) gasoline pipeline has been stalled for a few years. Nonetheless, the Taliban reemphasized dedication to the TAPI undertaking. This 1,800-kilometer, partially constructed pipeline would transport 33 billion cubic metres of pure gasoline yearly from Galkynysh to Fazilka in India.

There may be fear over who will purchase Turkmen gasoline. The elder Berdymukhamedov advised that international locations within the Center East could also be , however there’s problem in delivering the commodity to patrons. Russia could also be fascinated with getting concerned within the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline to make sure the safety of the undertaking. Russia’s involvement in TAPI might also have an effect on regional energy politics. Additionally, easing relations between Azerbaijan and Turkmenistan may assist Azerbaijan, which doesn’t have sufficient gasoline to fulfill home and export demand, meet its commitments. The latest visits to Moscow of the Azerbaijani president Ilham Aliyev and Pakistani Prime Minister Imran Khan might speed up the event of the 2 new pipelines from Turkmenistan.  

Turkmenistan, however, is a worldwide chief in GTL expertise, since it’s dwelling to the world’s solely operational pure gas-to-gasoline plant, utilizing Haldor Topsoe’s modern TIGAS™ expertise. The plant reveals Turkmenistan’s ambition to monetize its huge pure gasoline reserves, transfer up the availability chain, and diversify its export prospects. The plant produces artificial gasoline that meets the very best environmental necessities, incorporates no sulphur, and produces only a few dangerous by-products. 

A brand new president extra open to dialogue with the West may gain advantage Turkmenistan, as seen elsewhere in Central Asia. In Uzbekistan and Kazakhstan, energy has moved to a brand new era and civil society is creating. New presidents are resulting in new modalities of integration. A extra clear, open, and rule-based nation may entice profitable funding, providing the likelihood to enhance the lives of Turkmens.

Berdymukhamedov instructed his son to accentuate efforts to signal extra gasoline export contracts, however will he flip to the West? Low commodity costs have till not too long ago damage all of Eurasia’s hydrocarbon exporters, however Turkmenistan’s troubles are additionally exacerbated by its political isolation and popularity as one of many world’s most oppressive and uncommunicative governments.

Serdar’s father initially promised to open up the nation and enhance its funding local weather, however these guarantees stay unfulfilled. Turkmenistan’s readiness to bolster its relationships with the West will rely upon Serdar’s willingness to fulfill the expectations of potential companions when it comes to commerce, industrial practices, human rights, political stability, and transparency. The prospect of accelerating renewable options to gasoline, the nation’s new 17 bcm in-kind pure gasoline debt to China for drilling new wells in Galkynysh, and competitors from different international gasoline producers make Turkmenistan’s financial system more and more challenged. Ashgabat might want to diversify its financial system and discover new methods to make market companions.

If Turkmenistan’s new president can liberalize his nation, it’s going to enhance its personal future and assist Ashgabat’s power safety by way of the diversification of patrons. However the individuals of Turkmenistan are usually not the one ones who stand to learn from these vital reforms. In dire want of recent power sources as a result of battle with Russia, Europe may gain advantage tremendously from new sources of gasoline. But a lot might want to occur earlier than that may turn out to be a actuality.

With Help from Ines Lepeu